Summary of Board Decisions

Summary of Board decisions are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions are included in an Exposure Draft for formal comment only after a formal written ballot. Decisions in an Exposure Draft may be (and often are) changed in redeliberations based on information provided to the Board in comment letters, at public roundtable discussions, and through other communication channels. Decisions become final only after a formal written ballot to issue an Accounting Standards Update.

November 13, 2013 FASB Board Meeting

Reporting Discontinued Operations. The Board discussed the comments received on the proposed Accounting Standards Update, Presentation of Financial Statements (Topic 205): Reporting Discontinued Operations, and redeliberated the following issues, as described below.

Scope

The Board decided that all entities should apply standards for reporting discontinued operations except for an entity’s oil and gas properties that are accounted for using the full cost method.

Definition of a Discontinued Operation

The Board decided that the results of operations of a component of an entity or a group of components of an entity should be reported in discontinued operations if both of the following criteria are met:

The component or group of components has been disposed of, or is classified as held for sale, together as a group in a single transaction

The disposal of the component or group of components represents a strategic shift that has (or will have) a major effect on an entity’s financial results. A strategic shift includes a disposal of:

A separate major line of business,

A separate major geographical area of operations, or

A combination of parts of (a) or (b) that make up a major part of an entity’s operations and financial results.

The Board decided that an acquired business that is classified as held for sale on the date of acquisition also should be reported as a discontinued operation.

The Board decided to provide additional implementation guidance to help entities evaluate whether a disposal of a component meets the definition of discontinued operation.

Continuing Involvement

The Board decided to eliminate the criterion on continuing involvement with a disposed component from the definition of discontinued operation.

Disclosures

In addition to currently required disclosures about discontinued operations, the Board decided to require several new disclosures.

For an equity method investment that meets the definition of a discontinued operation, an entity should disclose summarized information about assets, liabilities, and results of operations of the investee if that information was disclosed in financial reporting periods prior to the disposal.

For all other discontinued operations, the Board decided to require disclosure of:

The pretax profit (loss) of the discontinued operation for the periods that the results of operations of the discontinued operation are reported in the statement of comprehensive income

The major line items constituting the pretax profit (loss) of the discontinued operation for the periods that the results of operations of the discontinued operation are reported in the statement of comprehensive income

The operating and investing cash flows of the discontinued operation for the periods that the results of operations of the discontinued operation are reported in the statement of comprehensive income

If the discontinued operation includes a noncontrolling interest, the pretax profit (loss) attributable to the parent for the periods that the results of operations of the discontinued operation are reported in the statement of comprehensive income

The carrying amount(s) of the major classes of assets and liabilities included as part of a discontinued operation for all periods that the discontinued operation is classified as held for sale in the statement of financial position.

In addition to currently required disclosures about disposal groups, the Board decided to require new disclosures about disposals of individually material components that do not qualify under the new definition of discontinued operation. Public business entities would be required to disclose:

The pretax profit or loss attributable to the individually material component of an entity for the period in which it is sold or classified as held for sale and for all prior periods presented in the statement of comprehensive income

If the component of an entity includes a noncontrolling interest, the profit or loss attributable to the parent for the period in which it is sold or classified as held for sale and for all prior periods presented in the statement of comprehensive income.

Nonpublic entities would be required to provide that same information, but only for the annual period in which the component is sold or classified as held for sale.

Reclassification of Assets and Liabilities

The Board decided that an entity should reclassify the assets and liabilities of a discontinued operation in the statement of financial position for the period in which the discontinued operation is disposed of or is classified as held for sale and for all prior periods presented in the statement of financial position.

Transition and Effective Date

For public entities, the Board decided that the final Update should be applied prospectively to all disposals (or classifications as held for sale) that occur for annual periods beginning on or after December 15, 2014, and interim periods within that year. For nonpublic entities, the final Update should be applied prospectively to all disposals (or classifications as held for sale) that occur within annual periods ending on or after December 15, 2015, and interim periods thereafter. Early application is permitted.

The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot.

Technical Corrections and Improvements. The Board discussed a summary of comments received on the proposed Accounting Standards Update and changes to the proposed Update that address those comments. The Board decided to issue a final Update that reflects those changes.

The Board decided to retain certain glossary terms related to pension to avoid potential changes in existing accounting practice. The Board also decided to exclude from the scope of the upcoming final standard any proposed changes to the duplicate fair value terms for shared-based payments and the definition of fair value that originated within FASB Statement No. 157, Fair Value Measurements. The staff will undertake additional research on the duplicate fair value terms and present its findings to the Board at a future meeting, as part of the ongoing Technical Corrections project.

The Board decided that no transition guidance is necessary because the amendments would not result in substantive changes to the application of current U.S. GAAP. The Board also decided that the amendments should be effective as of the date of issuance in the first quarter of 2014.

The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot.